Press Release

PUC Audit Shows Duquesne Light Could See $37.9 Million in Savings

Published on 6/1/2006

Filed under: Electric

HARRISBURG – According to a management and operations audit released today by the Pennsylvania Public Utility Commission (PUC), Duquesne Light Co. could experience a yearly savings of about $5.9 million and one-time savings of $32 million by implementing recommendations from the Commission’s audit team.

The Commission voted 5-0 to make the audit report public. The Commission directed the company to proceed with its plan to implement some of the recommendations found in the audit. The Commission did not vote on the merits of the implementation plan, but will review Duquesne Light’s implementation actions at a later date.

The Commission will determine if the utility effectively carried out the recommendations or provided sufficient explanations and detailed cost/benefit analyses justifying why it did not. The company reports that it has implemented two recommendations and partially implemented 5 others. It hopes to complete implementing all 15 of the Commission’s recommendations by 2007.

According to the audit, the utility annually could save by:

• Reducing bad debt write-offs ($5 million);
• Decreasing long-term customer arrearages ($150,000);
• Increasing collection agency recovery rates ($207,000 - $345,000); and
• Writing off its obsolete inventory ($500,000). 

The company could also experience one-time savings by:

• Reducing it long-term arrearages ($4.3 million); and
• Decreasing its materials inventory ($5 million).

As a result of the audit, the company also experienced a one-time savings of $22.8 million by collecting the full amount of interest due from its loan to an affiliate. The utility granted an interest rate decrease from 8 to 5 percent on a $250 million loan to an affiliate, which was discovered during the audit. The decrease occurred without PUC approval. On Feb. 9, 2006, the Commission and the company reached a settlement that addressed the issues and included a contribution of $250,000 by the company to its programs to help low-income families.

The Pennsylvania Public Utility Commission ensures safe, reliable and reasonably priced electric, natural gas, water, telephone and transportation service for Pennsylvania consumers, by regulating public utilities and by serving as responsible stewards of competition. For recent news releases, or more information about the PUC, visit our website at www.puc.state.pa.us.

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Docket No. D-04MGT027

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